A logging company is suing two Canadian firms that once owned a pulp mill in northern Wisconsin for $23 million as part of an effort to reopen the mill that abruptly closed last week.
Johnson Timber Co. of Hayward said it was notified Feb. 16 by SMART Papers LLC it was closing its Park Falls pulp mill immediately and the company would buy no more wood chips from Johnson.
About 40 people lost their jobs, and the closing sparked fears that SMART would close its adjacent paper mill, which employs 300 workers and turns the pulp into high-quality paper products such as brochures and greeting cards.
SMART has not revealed its intentions for that mill, among the largest employers in a sparsely populated area of the state, and company officials did not immediately return phone calls for comment Wednesday. That mill's closure would be an economic blow to Park Falls, a city of 3,100 about 50 miles south of Lake Superior.
"We're dealing with a rumor mill right now,'' said Park Falls Mayor Thomas Ratzlaff, a technician at the paper mill. "The closing was kind of abrupt, and we've received no information after that.''
Johnson Timber filed the lawsuit Tuesday in Price County claiming Fraser Papers Inc. and Norbord Inc., both of Toronto, are breaching a contract signed in 2001 to keep the Park Falls mills open. Fraser sold the mills to Hamilton, Ohio-based SMART last year. Norbord is a corporate successor to Fraser's former parent company, Nexfor.
Johnson Timber signed a contract in 2001 with Fraser agreeing to supply wood chips to the mills, according to the lawsuit. In turn, Johnson agreed to spend millions of dollars to buy equipment and build a plant on the property to turn logs into wood chips.
If the mill was closed within 15 years, the agreement called for Fraser to purchase all wood inventory and equipment from Johnson. Nexfor, which later turned into Norbord, was added to the agreement in 2002.
Johnson Timber claims that Fraser and Norbord have legal obligations to keep the mill running or pay $23.4 million to buy the inventory and equipment. Even though they sold the mill to SMART, the companies were never released from the contract, the lawsuit claims.
Johnson Timber's lawyer, Jon Axelrod of Madison, sent a letter Tuesday offering to set up a meeting with all parties, including officials from Wisconsin state government, to determine whether the mill can be reopened. That step would drastically reduce the damages sought in the lawsuit, the letter said.
"My client would much rather have a customer for its wood than a lawsuit,'' Axelrod said. "I'm hopeful the two international companies will see fit to invest the necessary money to keep the pulp mill open.''
Tony Hozeny, a spokesman for the state Department of Commerce, said the agency was investigating the situation and whether it could do anything to keep the mill open. "We're going to see if we can be helpful,'' he said, noting the department has assistance programs to retain jobs in Wisconsin.
Officials from Fraser and Norbord did not immediately return phone messages Wednesday.Associated Press via Minneapolis Star Tribune
